All businesses benefit, if not rely, on word of mouth advertising and a systematic method to generate referrals. Consider an owner of a gym, for example, who offers one free month of membership to any member who refers a friend; two months may be provided gratis if two friends are referred and so on. In essence, this gym owner is not only helping to retain his - her current list of members by offering an incentive but adding to the customer base through the efforts of others.
Online business owners similarly attempt to increase their visibility and profit by enlisting others to offer lead generation, increased traffic and sales and, as such, reward those who do. Those who promote a merchant's website (known as affiliates or publishers) via the use of websites, blogs, emails, search listings, etc., reap the fruits of a revenue-sharing program provided by the merchant (also known as an advertiser).
Any visitor who visits the affiliate's website, for instance, can see the merchant's offering (labeled as an advertisement), click on it, and is redirected to the merchant's website via an internal link attached to the advertisement. If the visitor buys or performs any required action on the merchant's website, then a predetermined commission is paid to the affiliate by the merchant for referring the visitor to the merchant's website.
Some affiliate programs pay for the number of clicks, visits or leads generated. The calculation of the number of visits, clicks or leads is based on proprietary software of the merchants who track the status of their advertisements on the affiliate's website. This tracking enables them to determine the total commission payable to the affiliate.
Affiliate Advertisement Models
The various models adopted by popular affiliate programs are presented below:
Pay-per-click (PPC) or Cost-per-click (CPC): Here, the affiliate earns a predetermined commission if any visitor clicks on the merchant's advertisement and is redirected to the merchant's website.
Pay-per-impression (PPI) or Cost-per-thousand (CPM): Here, an impression means a single view of the advertisement. Hence, if the merchant's advertisement has been viewed, then the affiliate earns a predetermined commission, generally on a cost-per-thousand impressions basis.
Pay-per-lead (PPL) or Cost-per-lead (CPL) or Cost-per-action/acquisition (CPA): Here, if any visitor from the affiliate's website follows the linked advertisement of the merchant to the merchant's website, and performs a required action like account creation, newsletter subscription, form filling, etc., then the affiliate earns a predetermined commission. Banks selling financial products (for example, loans, credit cards, mortgages), cell phone manufacturers and Internet service providers usually opt for this model of affiliate marketing.
Pay-per-sale (PPS) or Cost-per-sale (CPS): Here, the merchant pays a predetermined percentage of the sale if any visitor referred from the affiliate's website makes a purchase on the merchant's website. This is the most common model and is widely followed by online retailers.
Pay-per-call (abbreviation not yet formed): This is a new model and is still in its infancy stage. Here, the merchant pays a predetermined commission for each phone call that is received by the merchant from the visitor who has followed the merchant's linked advertisement placed on the affiliate's website. The latest call-tracking technology is used to determine the source and number of calls. Today there are thousands of affiliate programs available. There are "affiliate program directories" that collect and supply affiliate programs. There are also affiliate networks like LinkShare and Commission Junction which connect the affiliate to hundreds of merchants offering such affiliate programs. There are Affiliate Program Managers (APM) and Outsourced Program Management (OPM) who link affiliates to different affiliate programs and also track their performance. These are third parties who act as intermediaries between the merchant and the affiliate.
Success Stories Abound
Numerous success stories have materialized by participating in affiliate programs. Here's a brief study of several success stories:
Affiliate Program Success Story #1: Jason Calacanis - A Google AdSense Affiliate
Jason Calacanis is the owner of Weblogs, Inc., which is a conglomerate of about 100 independent bloggers. The blogs are based on several topics like consumer technology, luxury goods, automobiles, etc. Industry experts and enthusiasts author all the blogs ensuring that the presented content is exemplary. Authors consistently provide new material, pinging Weblogs when they update their blogs. Jason gives a stipend to all the bloggers along with a portion of the AdSense earnings with respect to their blogs. Collectively, over 60 million page views a month are accumulated by the blogs of Weblogs, Inc.
Jason signed up for AdSense in September 2004 and in about six months time, the AdSense revenues grew from $200 to more than $1,000 to $3,000 a day. This was achieved by successfully using AdSense channels and the link unit ad format where a list of ads are displayed, pointing to corresponding areas of the site.
Jason advises, "Set goals for yourselves around traffic, number of ads shown, ads per page, number of clicks and as you optimize AdSense, the revenue will follow." He has written his success story because his testing was systematic and meticulous; he experimented and tried one or two new things at a time, always aware of the changes that were fueling the site's continued growth.
Affiliate Program Success Story #2: Chris B. - An eBay Affiliate
In May 2003, Chris B. joined the eBay Affiliate Program. He adopted the "natural search" model of eBay, wherein he created websites dedicated to particular products such as the Puma trucker hat, and established a good ranking for his sites in natural search engines like Google, Yahoo!, MSN, etc.
Visitors who clicked the natural links from those search engines were directed to his site, featuring the related items available on eBay with photos, prices, and listing ending times. From there, the visitors clicked on any product that aroused their curiosity. Thus, they were directed to the eBay site where they could register, bid, and/or buy that product. This way Chris referred traffic to the eBay website and earned eBay commissions.
He makes his living out of these commissions. Chris succeeded because he found out niche products with little competition so that his websites could have a good ranking in the natural search engines. He also made his websites in such a way that they could attract visitors to click on the products displayed and thereby go to the eBay website. In addition, he made a good decision to become an affiliate of an established and prominent company - eBay, and thereby ensured that his websites had a diverse range of products to highlight, leading to a "parent site" with a high degree of recognition.
Affiliate Program Success Story #3: Pedro Sostre - A Commission Junction Affiliate
Pedro Sostre is a brand consultant helping companies to establish and maintain an online presence. He has vast experience working with many companies, including large entities such as CBS Sportsline, the NFL, Motorola, BMW Motorcycles, and Reebok. In 2000, he launched his company, Sostre & Associates, which manages 25 active websites.
He has integrated the earnings per 100 clicks (EPC) model of advertisement from Commission Junction in all his websites – an important statistic that correlates actual sales to clicks/traffic. Knowing the "conversion rate" ensures that Pedro promotes products and services that are in demand, and suggests when to change promotion strategies to increase EPC.
His websites target specialty markets such as travel, cosmetics, audio books, book clubs, and financial services. His websites in this way drive traffic to the numerous advertisers of Commission Junction, and Pedro earns commission as a result. He makes his living based on the commissions generated by his websites.
Pedro says the secret of his success is based on three keys, namely, providing value to customers, collaborating with advertisers, and taking advantage of Commission Junction's sophisticated reporting capabilities.
He says, "Your site needs to be attractive and valuable to existing and potential customers. Make sure they have a good experience once they are there." Kerri Pollard, director of publisher development for Commission Junction, declares, “Great publishers like Pedro make our network the best in the industry. We wish every publisher would follow his practices as they are truly great examples of how to run a top-notch program.”
Affiliate Program Success Story #4: hollywoodvideo.com - An Amazon Associate
Amazon.com calls its affiliates, its "associates". It has over 1,000,000 members and thus can offer a range of advertisers from personal blogs to massive sites of Fortune 500 companies. Hollywoodvideo.com is a content site and is enjoying success serving as an Amazon associate. The site is primarily comprised of an exhaustive list of movies and the visitor is encouraged to learn more about these films through their sister site, reel.com. Visitors can then purchase the flicks, starting with a click of a link to Amazon.com. (Visitors can also buy videos directly on the hollywoodvideo.com site by clicking a relevant link, leading to the same destination: Amazon.com.)
The site's success may be attributable to the following reasons: It features the latest movies, the movies to come soon, top 10 movies, and even enables visitors to create a movie wish list of their own. Users are offered games, gift cards, and a store locator where they can buy or rent videos of their choice. The updated site content, providing a personal touch by the creation of a wish list and personalized movie recommendations, ensures repeated visits, thereby retaining old visitors as well as attracting new visitors. The more visitors, the more clicks leading to Amazon.com, and the greater the number of affiliate sales.
Affiliate Program Success Story #5: Robert Marcus - A LinkShare Affiliate
Robert Marcus likes to listen to music while jogging and so he came up with an idea of a website that would have extensive links to songs which joggers could listen from their iPods while jogging. He created the site JogTunes.com for music-paced running in 2005, and featured links to LinkShare merchant, Apple iTunes. The site became an instant hit and Robert attributes much of his success to LinkShare. As he says, "Thanks to LinkShare, music-paced running is an idea that is off and running."
The strategy that worked for Robert was that he identified a need of joggers. Indeed, if the music matched the pace of jogging, then jogging would become a more enjoyable, if not a more sustainable, activity. He fulfilled this need by providing joggers with music as per their choice, via links to one of the most reliable iPod compatible song providers, Apple iTunes. Furthermore, to ensure that his links would be correctly tracked and his payment would be received, he became an affiliate of an established and reputable affiliate network, LinkShare.
By examining the aforementioned affiliate marketing success stories, one can acquire valuable lessons, use some of the tactics employed and modify them when necessary. Indeed, learn from the masters of affiliate marketing to become one yourself.
Author, Andy Lax, is an account manager at IntelliCollect – a merchant account company that provides merchants with credit card processing and electronic check processing capability. This credit card processing company, http://www.intelli-collect.com offers the best rates, exemplary service and their own potentially lucrative affiliate program http://www.intelli-collect.com/affiliates.html
Part 2 of the article, "Affiliate Marketing Success Stories: Raising an Affiliate Cash Cow," includes a question and answer interview with affiliate marketing guru, Shawn Colllins, and provides an affiliate marketing "Do's and Don'ts List."
Article Source: http://EzineArticles.com/?expert=Andy_Lax
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